Frencken - RHB Invest 2023-11-27: Expect Earnings To Bottom Out; Upgrade To Buy

Frencken - Expect Earnings To Bottom Out; Upgrade To Buy

Frencken (SGX:E28) | SGinvestors.ioFrencken (SGX:E28)
  • We turn positive on Frencken (SGX:E28) as we see signs of revenue and earnings bottoming out, led by better-than-expected 3Q23 revenue traction from improving customer orders and a more positive semiconductor recovery outlook. Upgrade Frencken to BUY from Neutral, new S$1.45 target price from S$0.97, 28% upside with ~3% FY24F yield.
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3Q23 revenue ahead of forecast.

  • Frencken’s 3Q23 revenue of S$184m (- 6% y-o-y, +3% q-o-q) outperformed estimates. Growth was broad-based, with all segments posting positive q-o-q growth, except for industrial automation.
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    • The medical segment (+8% q-o-q vs -4% q-o-q in 2Q23, S$31m) saw higher sales to a significant customer in Europe.
    • The analytical & life science unit received higher sales in Europe and Asia (+6% q-o-q vs +1% in 2Q23, S$43m), and the automotive division was driven by products such as new antenna for EVs (+2% q-o-q vs -4% in 2Q23, S$18m).
    • Industrial automation was the only key segment that recorded lower numbers, being affected by a decrease in its customers’ capex (-59% q-o-q vs -12% q-o-q in 2Q23, S$7m).

Profit margin remained steady

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Alfie Yeo RHB Securities Research | 2023-11-27

Previous report by RHB:
2023-09-11 Frencken Group - Still Cautious On Near-term Recovery.

Price targets by 3 other brokers at Frencken Target Prices.

Listing of research reports at Frencken Analyst Reports.

Relevant links:
Frencken Share Price History,
Frencken Announcements,
Frencken Dividends & Corporate Actions,
Frencken News Articles


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